Clean Energy Costs on the Decline

Over the years, many climate change skeptics and economists have pointed to the high cost of clean energy. (such as solar panels, wind turbines, and batteries used for clean electric transport) They conclude these energy sources as too prohibitively expensive to be cost effective alternatives to cheap, carbon based energy like oil, coal, or natural gas. The transfer from dirty to clean energy would cause economies to crater as consumers and business would be unable to afford higher energy prices. Despite the many actions governments can take to minimize these costs through investment, subsidies, and tax breaks, the process of development and implementation would still lag behind increasing economic demand for energy, and would hinder growth.

However, despite ignoring the ‘external’ costs of pollution and climate change which, when taken into consideration make fossil-fuels the most expensive form of energy one could imagine, recent analysis has shown that clean energy costs are dramatically declining. A recent analysis by Bloomberg presented at the Clean Energy Ministerial of New Delhi illustrates just how disruptive clean energy is and could be in the existing carbon-based market.

Photovoltaic cells have dramatically declined in cost:


As have the cost of onshore wind turbines:


Additionally, the cost of Lithium-ion batteries have fallen steadily:


The culprit for falling prices has been a large rise in government investment for technological development as well as subsidies and tax credits for cheaper manufacturing and consumer costs. Quite obviously, the more capital investments are made in clean energy and battery research, the greater the return in innovation and efficiency. As the following chart illustrates, the amount of worldwide capital investment required to maintain a modest, somewhat reasonable threshold of carbon dioxide emission (so that emissions peak in 2020 and decline thereafter) is realistically feasible. Unfortunately, as one can see, expenditures have not kept pace with that goal. In fact, the US has seen a 37% decline in clean energy investments in 2012 from 2011 during the same period. More pressure must be put on the President and Congress to ensure adequate investment. From 2008-2011, the government via Treasury and the Federal Reserve spent nearly $8 trillion propping up our failing banking system. Just imagine the scale of innovation that would commence if a similar amount was applied to further developing clean energy.


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